Step 5: Select, Implement, and
Record Chosen Course of Action
1. Define Market & Select Target
2. Develop Market Mix
What is a Market?
• A market is a group of individuals or
organizations (i.e. buyers) having the
willingness and ability to buy goods or services
to satisfy a particular class of wants or needs.
• Understanding the market; selecting the best
market & understanding its buying behavior
are key to the success of the marketing plan.
Steps in Market Analysis
1. Define Market to Identify
Competitive Arena to
identify competitive arena
e.g. Coffee Market
Steps in Market Analysis
2. Segment the Market to Determine Competitive
tactics.
– If you can find an objective reliable way to define
groups of people;
– If you can measure the sales and profit potential of
the segments;
– If these segments can be profitably reached using
marketing
– If you can expect a different response from the unique
marketing plans you offer each segment
Segmentation Effective If…
• Measurable – Size, purchasing power, profiles of
segments can be measured
• Substantial – Size of market large enough to justify
tailored strategy costs
• Accessible – Reachable via personal or
impersonal media
• Differential – Homogenous within & heterogeneous
between; must respond differently to different
marketing mix elements & actions.
• Actionable – Company can develop different
marketing strategies to serve segments.
Steps in Market Analysis
3. Develop profiles of the resulting
segments
4. Evaluate the attractiveness of each
segment & Select the Target Segment(s)
– Understand Customer Motivation and
Behavior to determine relevant assets and
skills
Bases for Segmenting
Consumer Markets
Explain how each factor affects a company’s
marketing strategy.
Geographic
Nations, states, regions,
counties, cities, neighborhoods
Demographic
Age, gender, family size, life cycle, race,
occupation, income
Continued on next slide!
Bases for Segmenting
Consumer Markets
Psychographic
Lifestyle or personality
Behavioral
Occasions, benefits, uses,
attitudes, loyalty, buyer-readiness
Multi-Attribute
Smaller and better defined
target groups, geoclustering
Bases for Segmenting Business
Markets
• Demographic
• Operating variables
• Purchasing approaches
• Situational factors
• Personal characteristics
Selecting and Entering Market
Single-segment
Segments Selective
concentration specialization
M1 M2 M3 M1 M2 M3
P1 P1
P2 P2
Product
specialization
P3 M1 M2 M3 P3
P1
P = Product
M = Market P2
P3
Selecting and Entering Market
Segments
Market Full market
specialization coverage
M1 M2 M3 M1 M2 M3
P1 P1
P2 P2
P3 P3
P = Product
M = Market
1. Identify the variables which are used to
segment this market.
1. Diaper Rash
2. Special Occasion
3. Other? Brainstorm!
1. Determine whether variables will lead to effective segment.
1. Measurable
2. Substantial
3. Accessible
4. Differential
5. Actionable
2. Is segment(s) attractive?
1. Size, Growth, Profitability, Risk, In sync with Company Objectives
3. Identify Type of segmentation strategy.
1. Single-segment
2. Selective Specialization
3. Product specialization
4. Market specialization
5. Full market coverage
How Do you segment Toothpaste market?
Toothpaste Market Segmentation
Benefit Demographics Behavior Psychographics Brand
Segment
Economy Men Heavy Users Value oriented
Medical Large Families Heavy Users Hypochondriac,
Conservative
Cosmetic Teens, Smokers Sociable,
(Bright teeth) Young Adults Active
Taste Children Spearmint Self involved
Lovers
How Do You Segment Las Vegas Hotel Market?
$$$$$ $179.95 and up
$$$$ from $129.95
$$$ from $89.95
$$ from $49.95
Airport Inn Travelodge $ from $29.95
Customer Analysis
• To develop an effective marketing plan, it
is necessary to understand customers and
their buying behavior
What Do You Need To Know About the
Customers?
• Who constitutes the market?
• How many are there?
• Why does the market buy it?
• When does the market buy it?
• Where does the market buy it?
• How much do they buy? How often?
• How do they make their buying decision?
Consumer Buying Decisions
• Multifaceted
– Product, Brand, Dealer Choice; Purchase Timing, Amount
• Multi Step
– Problem Recognition, Information Search, Evaluation, Decision,
Post Purchase Behavior
• Subject to Multiple Influences
– Cultural, Social, Personal and Psychological Factors and
External Environment
Features Influencing Brand Choice In Disposable Diapers
Rank Order – Number of Respondents
Features 1* 2 3 4 5 Totals
Absorbency 31 9 4 - 1 45
No Leak 11 9 4 2 1 32
Refastenable 3 10 8 4 6 31
Tapes
Elastic Legs 4 6 8 8 3 29
Elastic Waist 3 4 3 8 6 24
Size Availability 1 - 1 5 3 10
Gender Specific - 2 - 1 1 4
Printed Designs - - - 1 1 2
Wetness Indicator 1 - 1 - - 2
Other 7 - - - - 7
*1 = most important factor
Source: Wilson & Dallas, Nonwovens Industry, January 1992
Factors Influencing Choice of Diaper Type
Rank Order – Number of Responses
Factor 1* 2 3 4 5 Totals
Convenience 15 11 14 3 3 46
Brand 8 16 6 8 3 41
Price 14 7 11 6 2 40
Daycare 4 8 7 3 3 25
Requirements
Environmental 6 3 2 5 3 19
Concerns
No washer or 2 1 - - - 3
dryer
Other 6 3 2 - - 11
*1 = most important factor
Source: Wilson & Dallas, Nonwovens Industry, January 1992